National Australia Bank Ltd. (NAB), the country's third-largest by market capitalization, Thursday unveiled a surprise US$11.9 billion (A$13.3 billion) bid for AXA Asia Pacific Holdings Ltd. (AXA.AU), upstaging a rival offer from Australia's second-largest funds manager, AMP Ltd. (AMP.AU).

NAB must now convince AXA SA (AXA), which owns 53.9% of AXA Asia Pacific, to join it in the proposal as AXA SA had previously backed AMP's offer.

The acquisition of AXA Asia Pacific would propel either AMP or NAB into clear market leading positions in the Australasian life insurance and wealth management sectors, and give them the largest network of financial advisers in Australia. AXA APH said that other parties had also expressed interest in the business, indicating that the battle for AXA APH may not be over.

Both AMP and NAB plan to sell AXA APH's Asian businesses to AXA SA, which is looking to build its operations in the region.

If NAB's offer is successful, the deal would likely encourage further consolidation in the industry with AMP likely to become a target along with other asset managers such as Challenger (CGF.AU) and IOOF (IFL.AU), analysts say.

NAB is offering A$6.43 cash for each AXA APH share in a deal backed by the target's independent directors, AXA APH said in a statement. Under the proposal, shareholders can also accept a combination combination 0.1745 NAB shares and A$1.59 cash for each of their shares.

"The independent board committee has unanimously concluded that the NAB proposal is in the best interests of AXA APH minority shareholders and superior to the rejected AMP, AXA SA revised proposal, in both its value and terms," AXA APH Chairman Rick Allert said.

NAB Chief Executive Cameron Clyne said the acquisition of AXA APH is in line with the group's strategy of boosting exposure to the Australia and New Zealand wealth management sectors. In September, NAB completed its purchase of Aviva PLC's Australian wealth management operations and it also recently bought Goldman Sachs JBWere's private wealth business.

AMP and AXA SA Monday revised up their November offer for AXA APH to A$12.85 billion, offering 0.6896 AMP shares for each AXA APH share alongside an increased A$1.92 per share in cash.

AXA agreed to work exclusively with AMP on the AXA APH deal until Feb. 6. Only if AMP walks away from the deal would AXA be able to start working with NAB on a separate proposal before then.

NAB says its offer stands until Feb. 16 or six weeks after any decision by AMP to end the exclusivity period.

"We need to carefully consider the announcement and will discuss it with AMP before we make any public statement," said a spokesman for AXA SA.

AMP, which said Monday that its revised offer was final, wouldn't immediately comment on the NAB proposal.

AXA APH is the only Australian financial-services firm with the majority of its business in Asia and has exposure to eight regional markets, which account for two-thirds of its earnings.

Prior to NAB making public its proposal, a number of investors in AXA APH had said they wanted AXA APH to accept AMP's bid and so will also likely back NAB's bid.

Unlike the AMP proposal, NAB is offering investors the chance to take a full cash payment in return for their shares.

NAB said the deal values the Australian and New Zealand wealth management businesses at A$4.61 billion, against the A$4.41 value ascribed by AMP under Monday's sweetened bid. It said it can extract up to A$260 million in annual synergies within five years of the deal, including cost savings of A$210 million and a A$50 million boost to revenues. The pre-tax cost savings compare with AMP's estimate of annual savings of A$120 million after tax.

The bank would raise around A$1.5 billion through a rights issue to help fund the deal, once it completes formal due diligence on AXA APH and has the backing of AXA SA.

AXA shares were up 12.6% at A$6.36 after the news. AMP shares rallied 3.4% to A$6.31 amid some speculation it could become a target.

NAB said it doesn't expect the AXA APH deal would worry competition regulators but said the bank would discuss the proposal with the Australian Competition and Consumer Commission and with the government.

A spokesman for Treasurer Wayne Swan wouldn't comment on the deal neither would a spokeswoman for the ACCC.

-By Lyndal McFarland, Dow Jones Newswires; 61-3-9292-2093; lyndal.mcfarland@dowjones.com

(Bill Lindsay and Cynthia Koons contributed to this article)
Challenger (ASX:CGF)
Historical Stock Chart
From Oct 2024 to Nov 2024 Click Here for more Challenger Charts.
Challenger (ASX:CGF)
Historical Stock Chart
From Nov 2023 to Nov 2024 Click Here for more Challenger Charts.